Ref. Ares(2023)6897119 - 11/10/2023
BRIEFING FOR COMMISSIONER KADRI SIMSON
MEETING WITH THE EUROPEAN CHEMICAL INDUSTRY
15 February 2021 - video cal , 15:00-15:45
SCENE SETTER
You are meeting with The Europe Chemical Industry Council (CEFIC), which is the European
representation for the sector. The European chemical industry provide 1.2 million jobs and
account for about 17% of world chemicals production.
The chemical industry is also
the largest industrial energy consumer in Europe, accounting
for 20% of energy demand. Electricity accounts for 30% of the demand, whilst the rest of
energy demand (mostly heat) is supplied by fossil fuels. Furthermore, 20% of the imported
oil is used as a feedstock for the chemical industry to produce plastics, paints, and fertilisers.
The chemical industry is the
single largest consumer of hydrogen, primarily used in
refineries (45%), the production of ammonia (34%), and methanol production (12%).
The visit will be led by
, the
.
was elected
.He will be accompanied by 11 representatives from
ExxonMobil, Nouryon, DuPont, Shell, LyondellBasel, Covestro, Celanese, SABIC and the
association.
The participants would like to discuss the fol owing topics:
• Reiterate their support for EU’s objective for climate neutrality by 2050;
• Need to scale up renewable power production to decarbonise the chemical sector;
• Reforms to taxation and electricity costs to make renewable electricity costs more
competitive with fossil fuels;
• Lenient environmental state aid guidelines to support investments in transforming
the chemical industry;
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• Standardisation and certification of hydrogen;
• Revision of the EU ETS and carbon border adjustment mechanism;
• The upcoming chemicals strategy for sustainability;
• Ecodesign proposals for digital displays and kettles, with implications for the use of
chemicals.
If applicable:
Tour of the event / choreography
Fol owing a short introduction of the participants by
supporting the
climate objective and BASF commitments to fully decarbonise its manufacturing plants, you
wil be asked for some introductory words.
Fol owing your introductory words, the participants wil bring forward several discussion
points.
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LINES TO TAKE
• Thanks for the timely meeting. In 2020, the Commission has set
out its vision for the energy sector with the publication of several
strategies (energy system integration, hydrogen, offshore
renewable energy, and the renovation wave) and with the Climate
Target Plan.
• We have now entered the phase where these strategies are
turned into policy proposals. Several public consultations have just
finished, and we are very pleased with the responses that we have
received. The public consultation on the Renewable Energy
Directive has received close to 30.000 comments.
• Our Climate Target Plan proposed to reduce EU greenhouse gas
emissions by at least 55% by 2030, compared to 1990. The
endorsement by the European Council in December 2020 of this
“at least 55%” target will have major implications for our energy
system.
• The chemical industry is a critical partner in achieving our climate
objectives. As the largest industrial energy consumer, your
activities will have important implications for our future energy
mix. At the same time, your products and materials are crucial to
help develop the clean energy technologies, including batteries
and electrolysers, needed to manage our future energy systems.
• To reflect the increased ambition there is an urgent need to
significantly step up energy efficiency efforts by 2030. It is
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estimated – in the Impact Assessment of the Climate Target Plan –
that the energy efficiency ambition needs to be increased from
32.5% to 36-37% for final and 39-41% for primary energy
consumption.
• For renewables, our analysis suggest that the share wil have to
increase from 32% to 38-40% by 2030. This would constitute a
rapid increase of the share of renewable power in our electricity
mix, from around 35% today to 60% by 2030.
• To support these ambitious targets, we have also put forward our
proposal for the revision of the Trans-European Networks for
Energy (TEN-E). Of interest to this audience are our proposals to
create new infrastructure categories for cross-border hydrogen
networks for long-distance transport, cross-border CO2 pipelines
for the purpose of permanent storage of CO2, and a new focus on
offshore electricity grids.
• We are currently working on our policy proposals to increase
energy efficiency as well as the production of and demand for
renewable energy.
• As discussed in our energy system integration strategy and our
hydrogen strategy, we are also exploring options to increase the
production of and demand for renewable and low-carbon fuels,
including hydrogen. As such, we are considering dedicated policies
to support the use of renewable energy in the industrial sector.
• To support the scale-up of renewables, we are also using the
Recovery and Resilience Facility that has been approved by the co-
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legislators, and for which 37% will need to be used to support the
green transition.
• As part of the Facility, we have prepared a dedicated flagship
called ‘Power Up’ to help guide Member States in their
preparation of their plans to support more renewables and
renewable hydrogen production.
• These plans are due in the next couple of months, and your
assistance in identifying investment programmes and relaying
these to your governments would be highly appreciated.
• I am also very pleased with the active role that CEFIC is playing in
the European Hydrogen Alliance, and your chairmanship of the
roundtable on industrial applications of hydrogen.
• We also stand ready to help the industry through the IPCEI
framework, where both ‘low CO2 emission industry’ and
‘hydrogen technologies and systems’ have been identified as
strategic value chains for Europe.
• Following this short introduction, I would like to pass on the floor
to
to help guide the discussion.
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DEFENSIVE POINTS
We need more renewable electricity and associated infrastructure
to decarbonise the chemical sector?
Our energy system integration strategy recognises the need to scale
up the production of renewables. Electrification of the end-use
sectors, as well as the production of renewable and low-carbon fuels
are two of the pil ars of our strategy.
The purpose of our offshore renewable energy strategy is to scale up
the production of large volumes of affordable and reliable renewable
power generation. Our proposals for the revision of the TEN-E are
supporting the development of infrastructure to evacuate this
renewable power to the end-consumers, like the chemical industry.
Besides direct support for the production of renewables, we are also
working on policy proposals to support infrastructure, the creation of
liquid markets, including new taxation rules, to get the renewables to
the end-consumers, and new forms of digitalisation to help a smooth
operation of the energy system.
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How can we make electricity more affordable?
We are working on a new energy taxation proposal, in which we are
addressing the relatively higher level of taxes and levies applied to
the electricity, and the lower levels of taxation for fossil fuels (oil, gas
and coal) used in the heating sector.
Taxation issues requires unanimity, so we rely on your help to ensure
that Member States also see the benefits of more coherent and
Europeanised approach to setting taxation rates that are compatible
with our climate objectives.
Why do state aid guidelines not support operational aid
programmes, which are needed to bring solutions like renewable
hydrogen to the market?
The current state aid guidelines allow for the support of operational
aid for renewable sources. A revision of the state aid guidelines has
started, with the first public consultation closing on the 20th
December 2020.
One of the elements that wil be considered is whether to al ow a
reduction of energy charges for Energy Intensive Users, because the
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effectiveness of this policy highly depends on the proportion of the
RES charge over the electricity bill for Energy Intensive Users in the
various Member States.
We understand that the revision of the EEG in Germany has
addressed some aspects of the renewable surcharges, but that
more legislative changes to facilitate repowering of existing wind
farm sites and better framework conditions for power purchase
agreements (PPA) between renewable operators and private
consumers are still under consideration.
The Commission adopted revised EU Emission Trading System (ETS)
State aid Guidelines in the context of the system for greenhouse gas
emission allowance trading post-2021, which will enter into force
from 1 January 2021. This Guidelines maintains compensation for
companies at-risk to exposure to higher electricity prices resulting
from the carbon price signals created by the EU ETS. Additional
conditions have been introduced to ensure decarbonisation efforts
by companies.
When wil you introduce certification of renewable and low-carbon
hydrogen ?
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The energy system integration strategy and the hydrogen strategy
recognise the important of introduction certification of all renewable
and low-carbon fuels, including for renewable and low-carbon
hydrogen.
The revision of the renewable energy is exploring the option to
introduce such a certification scheme, which will consider the full life
cycle greenhouse gas emissions associated with the production of
the renewable and low-carbon fuels.
At the same time, the renewable energy directive has already
introduced ‘guarantees of origin’ for renewable electricity,
renewable gases, and renewable heat. These guarantees of origin
can already be used today to help inform consumers about where
and when the renewable hydrogen is being produced.
How wil the revision of the EU ETS impact the decarbonisation of
the European chemical industry?
The revision of the EU ETS, the introduction of a possible carbon
border adjustment mechanism, and the revisions of the renewable
energy and energy efficiency directive are al part of the “Fit for 55”
package.
The Impact Assessments for these legislative proposals are co-
ordinated, which means that we are assessing the aggregated
impacts of these revisions.
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How is the consistency between the energy policies and the
chemical strategy for sustainability ensured?
The Commission recognises that chemicals are also the building
blocks of low-carbon, zero pollution and energy- and resource-
efficient technologies, materials and products.
With the increasing need for clean energy technologies, the
Commission also recognises that the demand for raw materials and
critical raw materials will be increasing. This is why the renewables
sector has been included as part of updated list on critical resource
materials.
Within the chemical strategy for sustainability, we are proposing a
number of actions to support the chemical industry from an energy
perspective, including:
- Support for the development and deployment of infrastructure
al owing to switch to the use, transport and storage of
electricity from renewable / carbon-neutral energy sources for
the production of chemicals;
- Funding for research and development in advanced materials
for applications in the energy and electronics sectors to deliver
the green transition;
- Funding for research, development and deployment of low-
carbon and low environmental impact chemical and material
production processes;
- Funding for research and development of innovative business
models such as performance-based business model to ensure a
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more efficient use of chemicals and other resources, including
measures to recycle and re-use critical raw materials.
Why are chemical product policies pursued through the eco-design
proposals, and not through the Registration, Evaluation,
Authorisation and Restriction of Chemicals (REACH)?
The rationale for including chemical materials in the Ecodesign
measures is to ensure that materials used in products can be
recycled.
The current framework of REACH primarily focuses on
“hazardousness” of materials, and not on the recycling yields of
materials. One possibility is of course to revisit the REACH legislation
to also cover “circular economy” aspects (i.e. recycling yields of
plastics with these additives).
Since the case on Displays is put forward to the European Court of
Justice (Case T-113/20, submitted Feb. 2020), I am in a difficult
position to respond in detail.
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